Toyota may release cars powered by an electric motor combined with a diesel or natural gas-fuelled piston engine to suit local market needs, senior managing director Hiroyuki Watanabe said.

Toyota is "developing hybrid systems that can be used for gasoline, diesel, natural gas and fuel cells, which will be the most fuel-efficient," Watanabe said in an interview in Tokyo.

Toyota started selling its Prius gasoline-electric hybrid in 1997, and will boost the model's monthly output by half in 2005 to meet surging demand and stay ahead of rivals including General Motors and Ford. Carmakers are spending billions of dollars to develop cleaner hybrid or fuel-cell vehicles to meet tougher emissions laws and as population growth spurs auto demand.

Toyota makes at least 10 kinds of diesel engines worldwide, fitting them in vehicles such as the Yaris and Corolla compact cars, Avensis sedans, RAV4 and Land Cruiser sport-utility vehicles, and Hilux pickup trucks.

Diesel-powered cars account for more than 40 per cent of the European auto market. Toyota boosted car sales in Europe by 14 per cent in the first half of 2004, with new diesels helping it take market share from Peugeot Citroen and GM.